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Landlords Optimistic about buoyant buy-to-let market

Almost 100% of landlords asked expressed demand to rent their properties was healthy and they could see no reason for business conditions to change for the worse, says lender Paragon Mortgages.

Just 4% of landlords were pessimistic about the prospects for their property business, while 16% were planning to add more rental homes to their property portfolios.

Most (55%) are competing with first time buyers by looking for two-bed terraced homes as their next purchases.

Detached homes are slightly more popular, with 15% of landlords looking to buy – up from 12% in the previous quarter.

Reporting yields, the lender believes the average return on investment for landlords is 6.2% for the second quarter of 2014 – a slight rise on the 6.1% yield in the first three months of the year.

The lender pointed out that yields had stagnated at the same level for around 12 months as property prices increased.

Around 70% of landlords are expecting problems with rent arrears to stick at around the same as current levels for the next 12 months. Just 11% feared they would worsen.

Paragon Mortgages calculates the average landlord portfolio comprises 13 rental properties worth £1.60 million.

Average voids – the time a property is vacant between tenancies – is 2.7 weeks.